Cost to Refinance Mortgage: Breaking Down the Numbers
Discover the necessary cost to refinance your mortgage. Learn about fees, interest, and other factors that affect the total cost. Get started now and break down the numbers together.
Cost to Refinance Mortgage: Breaking Down the Numbers
Refinancing a mortgage is a popular way to take advantage of the current low interest rates. If refinancing could save you money, it may be worth taking the steps to secure a new loan. But before you can consider a refinance, you need to understand the costs and fees associated with the process. Here is an overview of the typical costs to refinance a mortgage.
Application Fees
The application fee, also known as an upfront fee, is the first cost associated with refinancing a loan. This fee covers the cost of processing the loan application and credit checks. The cost is usually between $75 and $400. Be sure to ask a loan officer if there are any application fees before you decide to move forward with the loan application.
Origination Fees
An origination fee is charged by the lender for processing the loan. This fee is usually expressed as a percentage of the loan amount, typically between 1-2%. This fee covers the costs incurred by the lender in setting up the loan, such as administrative costs and other expenses. While these fees can add up, remember that some lenders may include them in the cost of the loan.
'Appraisal Fees
The appraisal fee covers the cost to hire an appraiser to give an estimated value of the home. Average appraisal fees range from $300 to $500, depending on the area, type of appraisal, and complexity of the loan. It is important to note that some lenders offer waived appraisal fees for certain loan programs, so ask your lender about potential discounts.
Title Fees
A title fee is a cost associated with conducting a title search and ensuring the title of the home is free and clear. This fee typically ranges from $200 - $400, and may be included in the closing cost of the loan. Keep in mind that title fees can vary state to state, so be sure to contact your local county recorder's office to get a better understanding of the cost.
Closing Costs
Closing costs are a combination of all the above costs plus any additional fees associated with the loan. This cost is usually quoted as a percentage of the loan amount and can be anywhere from 2-5%. This is an important number to consider when comparing the loan options from different lenders.
Refinancing a mortgage can be a smart move if the cost savings outweigh the fees. Be sure to consider all the direct and indirect costs associated with each loan option to make sure you choose the one that best suits your needs.